Groupon climbs social ladder

Jul. 1, 2013
|

Eric Lefkofsky, CEO of Groupon / Groupon

by Jon Swartz, USA TODAY

by Jon Swartz, USA TODAY

SAN FRANCISCO - Groupon continues to regroup - or at least give doubting analysts and investors a reason not to take a bat to its battered image.

Today, the daily-discount service used by 42 million people unfurls Groupon Reserve, a tool that lets consumers book reservations at high-end restaurants in 10 cities - including Boston, New York, Los Angeles and here - with discounts of 20% to 40%.

Reserve offers customers a discount off their check without requiring pre-payment or vouchers. It also gives local businesses the chance to draw crowds at slow hours through flexible pricing.

That service will expand this year into deals for prestigious brands at spas, beauty salons and hotels.

"It's another major milestone," Groupon co-CEO Eric Lefkofsky told USA TODAY in a rare interview. Groupon broadened the availability of deals last fall and is now ratcheting up higher-end deals.

"The company is in a much better place than it was four months ago," says Lefkofsky, who took over the helm earlier this year with co-CEO Ted Leonsis. He says customers and merchants were "largely unaffected by the rockiness of last year" and the company's stock has inched up to $8.55.

"We're going to go slow and not overreact," Lefkofsky says of the past few months, when things seemed to have stabilized after the ouster of former CEO Andrew Mason.

If there's been a piñata among high-profile publicly traded tech firms, it's the Chicago-based Groupon. Valued at a stratospheric $15.8 billion last year, it's now worth about $5.7 billion amid concerns about an ultracompetitive climate in the online discount market.

Groupon's grand plan is to become the "operating system" for local commerce. But it faces intensifying pressure from Google, LivingSocial and others, because its business model is easy to replicate. With Reserve, it could butt heads with OpenTable, too.

In September, Mason said the company's future success hinged on going "deeper" into an estimated $3 trillion local-commerce market. At the time, Groupon added the latest piece to its portfolio: It plunged into the mobile credit card payment business, joining a crowded field that includes Square and PayPal.

"We're not trying to make money hand over fist," Mason told USA TODAY in an interview then. "The goal is to enhance (services) for daily deals."

That service - an iPhone and iPod Touch app, coupled with a free credit card reader/swipe or $100 durable smartphone case with built-in swipe - let restaurants, salons and spas, retailers and other local businesses accept credit card payments at a lower rate (1.8%) than other providers.